The Indian markets came into rally mood in last session and the benchmarks surged over one and half a percent, on hopes that RBI may not go for a rate hike and once again maintain a status quo. Today, the start is likely to be soft tailing the global peers; however there is some good news for the markets, as the annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) for December 2013, eased to 9.87%, its three months low, as compared to revised 11.16% of November 2013. Though, the core inflation have not buzzed from their highs but weak IIP numbers and decline in headline inflation is likely to give some leeway to the RBI. There will be some support with international credit rating agency, Fitch Ratings saying that Government efforts to achieve the fiscal deficit target of 4.8 percent of the GDP in 2013-14, are supportive for the country's credit rating. Aviation stocks are likely to get some advantage with the report that India’s domestic air traffic grew 3.4 percent in November last year, in spite of significant volatility in the market. The retail stocks too will keep buzzing with the Aam Aadmi Party Government withdrawing the approval given by the previous government’s dispensation for FDI in multibrand retail in Delhi.
The US markets went for a sharp correction in last session, reacting to the disappointing non- farm payroll data, traders were also worried about the ensuing earnings season. The Asian markets following the US peers have made a lower start with Japanese benchmark leading losses by over 2 percent.
Back home, boisterous benchmarks exhibited an enthusiastic performance on Monday, by rallying over one and a half percentage points and breaking a lot of psychological levels in their northbound journey. There appeared not even an iota of profit booking in the session, as the benchmarks managed to fervently gain from strength to strength with investors continuing their hunt for fundamentally strong but oversold stocks. Frontline indices not only managed to end near intraday high but also recorded their biggest single-day gain since November 25, 2013, settling comfortably above their crucial 6,250 (Nifty) and 21,100 (Sensex) bastions. Sentiments remained up-beat since beginning on hopes that the Reserve Bank of India (RBI) will keep interest rates on hold for a second consecutive month at its policy review on January 28. Further, reports suggest that December consumer price inflation due for release later in the day is likely to ease. It may be recalled that weak festive demand and sluggish investment activity led to a slump in factory production in November when the output contracted to a six-month low of 2.1%. Investors shrugged off the fall in index of industrial production (IIP), which was sharper than October’s decline of 1.6%. Firm opening in European counterparts too supported the sentiments; moreover, most of the Asian equity markets shut shop in the positive terrain. Back home, sentiments also got some boost after rupee strengthened significantly in Monday’s trade after the US dollar remained under pressure on the back of weak US jobs data. Meanwhile, shares of oil and gas companies edged higher by up to 3 percent in early morning deals after the government officially notified the new gas pricing policy that would be applicable to all the domestically produced gas from April 2014, and will be effective for five years. As per the new pricing mechanism, the new gas price is likely to be $8.4/mmbtu for FY2015. Currently, the gas prices are in the range of $4.2-5.7/mmbtu for domestically produced gas. Finally, the BSE Sensex surged by 375.72 points or 1.81%, to settle at 21134.21, while the CNX Nifty gained 101.30 points or 1.64% to settle at 6,272.75.
